ragerunner

dmerkow, Thanks for you comments on labor and employment.

I think when it comes to these assets that are based on physical property then it is only worth what someone else is willing to pay for it. Today. Could its value go up or down in the future, yes. But, buyers must be allowed to calculate the risk along with the physical value (which includes a calculation of what the property could generate). I would agree that this 'paper' does have the value to generate revenue but, it has become very apparent that it is unable to generate what the original book value stated it would generate. I agree that its value should be what it can generate. The problem with what the banks have done is that risk was not calculated into the book value correctly, so its worth is less than the booked value. Now, reality is showing that the risk was massive and that must be factored into its value (mark to market). Is or will the market over correct, maybe, but with the value of these assets still declining on a monthly bases who knows. What is know is that the banks assessed values have already been proven inaccurate. So why would we let the ones who incorrectly valued these assets in the first place, get to say that the outside market is still wrong on their value? The problem I have with this 'valuation' process for banks is that you are letting the holder place a wish price on their assets, which have proven already not to be worth their original perceived value because the calculated risk that was used has already been exceeded.

We are knowingly allowing them to inaccurately estimate value. (legal fraud) This is no different then telling a person, we know your TV would sell for $100 but, since its not good for you economically, we will let you tell us its worth $200. The real issue is, its not worth $200 and will never be worth $200, but, this may give the banks a chance to unload more of this trash on the taxpayer down the road at inflated fantasy prices.

Speaking of changing the rules! What is that I hear, click, click, click, there is no place like home, there is no place like home, ..... All the wishing and dreaming and click of shoes will not change the long term reality of the paper crap on the bank's spreadsheets. I would think people would be running out of the stock market realizing all reality has been suspended for fairytale hopes and dreams. When the final shoe finally drops on this ponzi scheme there will be dead silence in the room as everyone looks around in total shock. FASB discussing changes to mark to market rules "WASHINGTON (MarketWatch) - Responding to pressure applied by lawmakers on Capitol Hill, the Financial Accounting Standards Board on Thursday morning engaged in discussions to give auditors more flexibility in valuing illiquid mortgage assets that may have long-term value and strong cash flow. The agency is expected to approve the new guidance later today. The rules are expected to boost bank operating profits when they report first-quarter results later this month. It alters so-called mark-to-market rules, which require banks and other corporations to assign a value to an asset, such as mortgage securities, based on the current market price for the security. Banks have complained they can't sell non-distressed assets because of a lack of a market. The measure allows corporations to use "significant judgment" when valuing these securities-in other words, they can estimate the value based on cash flows on their balance sheets rather than using the value the asset would receive if sold immediately." http://www.marketwatch.com/news/story/FASB-discussing-changes-mark-market/story.aspx?guid=%7BD4468C73%2DBF63%2D4738%2D80D6%2D7F973499E984%7D

This can not and will not end well. What is most disturbing about this is we are not done pledges and providing money. Financial Rescue Nears GDP as Pledges Top $12.8 Trillion (Update1) By Mark Pittman and Bob Ivry "March 31 (Bloomberg) -- The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s. New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008." http://www.bloomberg.com/apps/news?pid=newsarchive&sid=armOzfkwtCA4

I think confusion is part of the plan.

Throughout this economic meltdown there has been moments when you step back and realize we are taking another significant step into another world. I think today may very well be one of those holy crap moments. The Goverment, Wall Street and the FEDs are in pure panic mode now. "To assure consumers reluctant to buy GM or Chrysler cars, the government plans to take the unusual step of guaranteeing all warrantees on new cars from either company. These guarantees would lapse back to the companies once they return to health." http://online.wsj.com/article/SB123841609048669495.html "On Friday I was in Washington for a meeting with administration officials," Mr. Wagoner said in a statement released by GM. "In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have." http://online.wsj.com/article/SB123841609048669495.html "In a White House speech, Obama said the IRS will start notifying consumers who purchased cars after Feb. 16 that they can deduct the cost of any sales and excise taxes. The program would remain in effect till year's end." http://news.yahoo.com/s/ap/20090330/ap_on_go_pr_wh/obama_autos_incentives;_ylt=Av9RYh4RmMFi44Jv9bXBAK6yFz4D

Arenn, Congrats on winning the Chicago Transit Authority's first place prize. http://www.chicagotribune.com/news/local/transportation/chi-getting-around-30-mar30,0,4017581.column

rage, thanks for the insights. That did not come through for me in the report at all. Is there a more detailed document that I somehow overlooked? The report I saw was a standard "four color glossy". If there's a more detailed policy document or something, I'd love to be able to look at it. Arenn, If you have not already done so, you might find the website of interest. Check out some of the links and boards on there. I think this might show how much thought and objectivity was given to this project. The rest is hard to convey, I just know from all the meeting and discussions there was a lot of 'honesty' in the room about the challenges the region faces as well as its strengths. Side note: I enjoy reading you blog. Keep up the hard work. http://www.cincinnati360.com/

One of my greatest fears is that we will only act on this after the full pain has been administered. We will wait until we are forced to change how we live. American's in general are determined to live the oil lifestyle to the bitter end. Maybe we have already waited to long (I don't know). But, I do know it takes years to build a quality mass transit system, to change our building patterns, etc... America needs to have a real down to earth reality check on how it built environment is not working. I just hope the reality check is not at the edge of the cliff.

Surprise. Surprise. Sorry, I lost my Cincinnati Booster Club Society secret decoder ring so I can't hold hands around the campfire with the rest of you and sing Kum Bay Yah. Cincinnati is an amazing city with a ton of great stuff I drool over. That seems to have blinded its residents to its shortcomings, however. Until Cincinnati learns the secret of self-awareness, is able to step back and take a detached, objective critique of itself, it will never achieve its goals. To me the most remarkable thing about Nashville was when I showed up to one of their message boards after a visit there and posted a list of pros and cons I noticed, and they all basically said, "Yup - you nailed it. We need to work on A, B, and C". That's why Nashville is running rings around the Midwest. They know where they stand and where they want to go. Lest you think I'm just being an Indy partisan, I post negative stuff about that city all the time. My blog is arguably primarily a running critique of Indianapolis. What's more, in case you did not know, I spend 50% of my time in Chicago, so I know what a real big city looks like and what it functions like. I'm happy to engage in a substantive discussion around any aspect of the Agenda 360 plan, should you care to do so. I had the privilege of participating in creating several pieces of Agenda 360 (not just attending a public meeting). I really believe that Agenda 360 did step back and take an objective look at the Cincy region. Yes, the main goals may seem similar to other cities, but the Agenda 360 effort really did define how Cincy's uniqueness fits into these goals (not the other way around). For Cincy this was a huge step forward in an effort to address its major challenges and figure out why it is falling behind many of its peer cities, despite all of its attributes. I personally hope that Agenda 360 is given the place and time to move Cincy forward. This is an effort that really got down to the ground level and deserves the community's support.

I agree. We continue to miss allocate our finite resources and money at a lifestyle that is not sustainable in the future. But, in my line of work I run into a lot of people that still today think the cul-de-sac is Shangri-La. I do think some American's are starting to get it, but it is a very slow process and may not change things fast enough.

So, how deep has this recession gotten, so far? Worst quarter for the economy since the 1930s In terms of lost wealth, lost jobs, falling output, the fourth quarter stands out "WASHINGTON (MarketWatch) -- Now that the books are closed on the fourth quarter's performance, it's fair to say that the final three months of 2008 will go down as the worst quarter for the U.S. economy since the 1930s. In terms of the things that matter most -- output, income, wealth, profits, foreclosures and job growth -- the fourth quarter was a disaster. If you look at each of those categories in isolation, we may have seen worse on rare occasions, but when you examine the big picture, it was the worst since the Depression." http://www.marketwatch.com/news/story/Worst-quarter-economy-since-1930s/story.aspx?guid=%7B564B8982%2DACE7%2D464C%2D914E%2D24C37B5C1B21%7D What do you guys think? Have we hit the bottom, is the worst over, will we continue to stay at this level for a while, will we go lower, or are we starting to rebound? I think we have hit bottom for the time being. If commercial real estate goes bust later this year, and job loses keep growing, banks and other will take another leg down and so will the economy. The next few months are critical, they will either make this the bottom or we are going to have another big drop.

While its has become very obvious the Federal Government likes to 'overstate' data in today's economy and then revise it lower in the following months when all eyes are watching something else. It is refreshing to see a Federal agency basically admit they are stacking the deck when it comes to data collection. It a shame the confidence in the 'official' data is being lost across the US and around the world. FEDERAL HOUSING FINANCE AGENCY "WASHINGTON, DC – U.S. home prices rose 1.7 percent on a seasonally-adjusted basis from December to January, according to the Federal Housing Finance Agency’s monthly House Price Index. December’s previously reported 0.1 percent increase was revised to a 0.2 percent decline. For the 12 months ending in January, U.S. prices fell 6.3 percent. The U.S. index is 9.6 percent below its April 2007 peak. The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally-adjusted monthly price changes from December to January ranged from –0.9 percent in the Pacific Division to +3.9 percent in the East North Central Division. Month-to-month changes in the geographic mix of sales activity explain most of the unexpected rise in prices in January. The January home sales reflected in the FHFA data disproportionately occurred in areas with the strongest markets." http://www.ofheo.gov/newsroom.aspx?ID=500&q1=1&q2=None

I know I have discussed this before. But, I really think this may be one of the biggest pieces of this economic collapse. The effort to replace the dollar with a world currency. This would have huge implications to the US and to the world power system. I saw were China just announced their support for this as well. U.N. panel says world should ditch dollar By Jeremy Gaunt, European Investment Correspondent "LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar. Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket. Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform. ... http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318

The US and World car crisis in photos. http://www.guardian.co.uk/business/gallery/2009/jan/16/unsold-cars?picture=341883529

I think this is a clear sign that the economy is still in freefall (the 'new' data must be really scary). It also shows that foreign buyers of our debt (Treasurys) is deminishing significantly, making the FEDs the last resort of buying our debt. It also shows that Bernanke was talking out of his *** about a recovery by the end of the year. They already removed the recover comments. THE FED Fed decides to buy Treasurys FOMC sounds more pessimistic about the economy By Greg Robb, MarketWatch Last update: 2:40 p.m. EDT March 18, 2009Comments: 239WASHINGTON "(MarketWatch) -- The Federal Reserve on Wednesday surprised financial markets and committed to buy $300 billion in longer-term Treasurys to help the struggling American economy recover. The Fed also tweaked its other credit-easing programs by committing to buy more mortgage-backed securities and agency debt and include more asset-backed securities under a new credit facility starting this week. Most analysts had thought that the Federal Open Market Committee - the policy making arm of the central bank -- would keep the weapon of buying Treasurys in reserve in case of a crisis. The decision to buy Treasurys shows that the crisis is here. ... http://www.marketwatch.com/news/story/Fed-decides-buy-Treasurys/story.aspx?guid=%7B99A44732%2D2AD2%2D4F2F%2D833A%2DB7FFFC85451D%7D#comments

Ok, this is just to funny to pass up. Its an article on housing, etc... in Gainesville, Florida. Check out the names in this article. The news writer had to have fun with this one. :lol: Spring tour showcases historic Gainesville homes ...."Homeowners in Duckpond are proud of the restoration, renovations and maintenance of their historic homes," Scott said. "My neighbors graciously share their experiences and tips." Another home on a tour will be the 1928 Matthews house, now owned by Marilyn Wall Asse, a co-founder of the Hippodrome State Theatre, and Carlos Asse, a set designer at The Hipp. It, too, was a rental house when it was first built. The first renters paid $50 a month. The Asses bought the house in 2000 and have renovated the kitchen, bathroom and front closet. The mechanical systems and wiring were updated and ceilings re-plastered. Carlos Asse designed a deck, which Marilyn Wall Asse built. Marilyn Wall Asse also has worked for four years on her gardens in the backyard, mostly at night with an $8 shovel from Wal-Mart. "The deck and beautiful gardens make us feel like we live in paradise," she said. The 1947 Lannie and Bess Thompson house owned by Amanda Bliss and David Menet, the 1913 Kelley-Swords house owned by Judith Russell, the 1926 Adkins-Cone house owned by Cindy and Mike Strange and the 1926 Duncan house owned by Sue Jester conclude the Spring Promenade's six featured houses...." http://www.gatorsports.com/article/20090311/ARTICLES/903111006

We can only hope and dream wall street will come clean, truth serum is administered and these executives go to jail. I got to be honest, I am not very hopeful this will ever happen in a significant way.

Anyone who believed Bernanke's 'projections' yesterday are not playing with a full deck. He and the FEDs tolds us subprime was contained, that the banks were fine, that the economy would not go into a recession, etc.... There comes a point in time when even the 'sheep' figure out the are being led to the slaughter. Foreclosures are going to skyrocket this year and Alt-A will only add more damage to the disaster. The banks will continue to bleed and the government will continue to try every conceivable bailout option they can come up with. But, the damage is already 'cooked on the books'. Will foreclosures forestall market rebound? Commentary: Latest numbers show plenty more pain ahead "LONDON (MarketWatch) -- Investors may have breathed a collective sigh of relief at Fed Chairman Ben Bernanke's reassurance that the recession will be over by Christmas -- if he can just get those wacky banks fixed -- but U.S. home foreclosures are sending a very different message. The numbers for February were appalling, up 67% from January to 121,000, and nearly 20% above the previous monthly record, set last September. Worse yet, the number of homes in pre-foreclosure proceedings is even higher. All of this is occurring in an environment where the U.S. government is pressuring lenders to hold off, and where the Obama administration has been at pains to front billions to prevent further foreclosures. ... -- Tom Bemis, assistant managing editor http://www.marketwatch.com/news/story/Will-foreclosures-forestall-market-rebound/story.aspx?guid=%7BF680C35A%2D89FC%2D4D0A%2D90E4%2D245ABCDAB9B5%7D

If I remember correctly, CF was planning on restructuring their debt in the next year or two when they bought all the Paramount parks. They maybe finding it difficult to accomplish this.

Interesting read from Minyanville. Big Ben Chimes on Wall Street Todd Harrison Mar 10, 2009 9:40 am Step inside, walk this way, you and me Ben, hey hey! I return to my turret to find Big Ben on the little screen and his words all over my eight other screens. As I scrolled through his vibe, a few headlines stood out. Among them: The Fed needs to buttress protection for money market funds (this is huge from a "social order" perspective). He urges authority to take over the biggest financial firms (read: nationalization, temporary or otherwise). Fed should play some role in broader risk management (HELLO McFly!--Where was this proactive initiative when the writing was on the wall?) Fed will seek legislation 'on its own account'' (help me here--does this mean they, themselves, will push for legislation or they want legislation to enable 'its own account,' namely Fed bonds). And finally, and perhaps most importantly, he said he wouldn't support suspending mark-to-market." "....One thing for certain, Minyans, something big is coming down the pipe. Take a deep breath and remain lucid--this is what we've trained for." http://www.minyanville.com/articles/YHOO-Bernanke-GE-Fed-drys-spx/index/a/21537

Too big to fail? 5 biggest banks are 'dead men walking' "WASHINGTON — America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show. Citibank, Bank of America , HSBC Bank USA , Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31 . Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days. The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring. ... http://news.yahoo.com/s/mcclatchy/20090309/pl_mcclatchy/3184724;_ylt=AhG5kViti9PVN9_oFnKp5sADW7oF Two things jump out in this article. One, the taxpayer will not be able to bail these guys out and two, trust is gone on Wall Street. What a sad state of affairs for the US and its economic reputation.

Lots of debt. I would also say the chances of reorganizing that debt is very low. So, they look to sell assets.

This concept hasn't done well for AIG. But, when your back is against the wall you will try just about anything. U.S. government to own up to 36% of Citi Bank to convert preferred securities to common stock, reconstitute board "NEW YORK (MarketWatch) -- Shares of Citigroup Inc. tumbled more than 30% Friday, retreating after it said the government agreed to boost its stake in the embattled company to about 36%, and as the firm reported another $10 billion in fourth-quarter losses and said it will suspend common- and preferred-stock dividends." http://www.marketwatch.com/news/story/Government-boost-stake-Citigroup-36/story.aspx?guid=%7B325D60CB%2DF602%2D40B4%2DA746%2DFBDA4917EB50%7D Oops, we were off again by just A LOT!!!!! Our bad, please forgive us for making this a quarterly and monthly habit on our stats. Carry on!!! GDP revised to 6.2% rate of decline in fourth quarter Worst quarter since 1982 as spending, investment and exports drop sharply "GDP fell at a 6.2% seasonally adjusted annualized pace in the final three months of 2008, revised from the initial estimate of a 3.8% drop, the Commerce Department reported. It was the worst decline in GDP since a 6.4% decrease in the first quarter of 1982." http://www.marketwatch.com/news/story/GDP-revised-decline-62-fourth/story.aspx?guid=%7BF68D38CA%2D2BAE%2D45B0%2DA247%2D760432E0BF1A%7D